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What is a tax bracket? What is the relationship between filing status and the width of the tax brackets in the tax rate schedule?
Describe a tax bracket and discuss the relationship between filing status and width of the tax brackets.
Explanation of Solution
A range of taxable income which is taxed at a specific tax rate is referred to as tax bracket. The tax brackets are often referred to as marginal tax rates or marginal tax brackets, as at the specified rate, only the income in the particular range is taxed. Depending upon the filing status of the taxpayer, the level and width of the brackets vary. Seven tax rate brackets are included in the tax rate schedules. 10%, 12%, 22%, 24%, 32%, 35%, and 37% are the rates for these brackets. In general, for married filing jointly, the tax brackets are the widest, which is followed by single, head of household and married filing separately.
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